The Northeast Is Considering A Major Extension To Its Emissions Program

When the EPA released the Clean Power Plan last year, a lot of people freaked out. In fact, more than half of U.S. states joined a lawsuit challenging the plan, which seeks to limit greenhouse gas emissions from the electricity sector.

Opponents have argued that the plan is draconian, heavy-handed regulation that will kill jobs and drive up electricity bills.

In fact, nine northeastern states are already using a framework to lower electricity emissions — and it has been a massive success.

The Regional Greenhouse Gas Initiative, known as RGGI (pronounced: Reggie), is a carbon pricing mechanism that limits emissions and invests in efficiency and low-emission generation. Since it was implemented in 2008, RGGI states have seen a 37 percent decrease in emissions from electricity, while simultaneously decreasing consumer costs. RGGI will also function as a compliance plan for the Clean Power Plan, according to multiple industry sources — if it stays effective.

Right now, RGGI is under review — and businesses, environmental groups, regulators, universities, and private citizens are encouraging the states to double down on the program. They say extending the program to 2030 and lowering the annual limit on emissions will ensure RGGI stays successful.

Using Market Forces For Good

Under its current structure, the region’s cap on emissions decreases by 2.5 percent each year until 2020. But, in order to reach the 2030 standards set by the Clean Power Plan, the emissions cap will have to double to 5 percent each year. As an economic lever, a stronger, longer emissions cap will create more market certainty for power producers.

A lower cap ensures that there is demand for the carbon credits — which are sold at auction. That revenue is then pumped back into the economy in the form, mostly, of rebates for efficiency measures and low-income programs.

And when the cap is right, the entire economy benefits, advocates of the program say.

On Tuesday, 70 companies — including Levi Strauss & Co, IKEA, Ben & Jerry’s, and Unilever — sent a letter to the nine RGGI governors of Connecticut, Delaware, Maine, Massachusetts, Maryland, New Hampshire, New York, Rhode Island, and Vermont, urging them to extend the program beyond 2020.

Our support for RGGI is firmly grounded in economic reality

“Climate change poses a risk to our business, but it also presents an opportunity — and we applaud policymakers who rise to meet the challenge,” the companies write. “RGGI has been successful, but in order to meet long-term state emissions reduction goals, it must do more.”

The letter is intended to “dispel the notion that businesses don’t want to see progress in this area,” Anne Kelly, senior policy director at Ceres, which organized the letter, told ThinkProgress.

“We need to put the spotlight on our successes,” Kelly said.

That success is clearly shown by the data. RGGI has been more successful, in fact, than it was ever projected to be. In the initial design process, emissions limits were set to roughly “no growth.” That is, participants were hoping to just slightly decrease emissions. They outdid themselves.

CREDIT: Acadia Center

But not only has the program reduced emissions, it has been an economic boon.

It’s The Economy

It’s hard to argue with an emissions reduction program that not only works but also works as an economic driver.

The revenue from the quarterly emissions credit auctions goes back into the states’ economies — largely as efficiency programs. For instance, a Maine resident might be able to replace her windows or insulate her attic. Someone in Massachusetts might be able to install a modern, efficiency furnace. These improvements have direct economic benefits — both because someone is paid to make these improvements and because, going forward, they save residents money that can be spent elsewhere.

In Tuesday’s letter, the companies write, “Our support for RGGI is firmly grounded in economic reality.”

One report estimated that RGGI had boosted the region’s economic activity by $1.3 billion.

From 2008 to 2015, RGGI states have seen their economies grow faster than the rest of the country, while decreasing emissions twice as quickly, according to the first of a two-part report from Acadia Center looking at what RGGI has done so far.

The second part of the report, due out later this month, will look at what RGGI needs to do going forward.

According to Peter Shattuck, director of Acadia Center’s Clean Energy Initiative, RGGI negotiators have already suggested the 5 percent annual decrease in carbon credits — and they are considering a 10-year extension on the program.

“The fact that they are considering a more ambitious rate of decline is a first step,” Shattuck said. But he was quick to add that complying the the Clean Power Plan is only one part of lowering emissions.

More Than The Clean Power Plan

Under the Clean Power Plan, which applies to power plants and only power plants, states will have to submit a compliance plan to the EPA. But while electricity makes up a third of the country’s emissions, there is another two-thirds that the Clean Power Plan doesn’t touch. Transportation and heating, for instance, are two other major emitting sectors.

And what most observers seem to agree on is that RGGI could be more than simply a compliance plan.

The RGGI states have been leaders in this space for the last decade

All of the RGGI states have their own, economy-wide emissions reductions goals, Shattuck told ThinkProgress.

Massachusetts, for instance, has a mandate to reduce emissions by 80 percent by 2050.

That means the states should not just be considering how RGGI can help meet Clean Power Plan goals, they should also consider how RGGI can be used to transition the economy as a whole.

“There are a lot of complementary policies that can help move towards emissions reductions,” Shattuck said.

Partly, that means setting renewable energy goals. Massachusetts passed a bill Sunday calling for an additional 1,600 megawatts (MW) of offshore wind generation and another 1,200 MW of hydro, onshore wind, or solar. In New York, Gov. Cuomo just signed a law requiring 50 percent renewable energy by 2030.

But it also means powering transportation and heating with clean electricity, Shattuck said. As he noted, “Electric vehicles are more efficient when they run on the relatively clean northeast grid.”

Using the RGGI framework to support the transition to a clean energy economy would be huge — and it’s possible.

“The RGGI states have been leaders in this space for the last decade,” the Sierra Club’s Kresowik said. “They have led the nation in reducing carbon pollution, and we think the RGGI states should continue to lead the nation.”